by John Waggoner , USA TODAY

by John Waggoner , USA TODAY

Janet Yellen is the presumptive nominee for Federal Reserve chairman. Here's what the Fed chairman does, and why it's important:

â?¢ The chairman of the Federal Reserve is the public face of the Fed, testifying twice a year before Congress and explaining â?? albeit often in dense Fed-speak â?? what the Fed thinks about the economy, and why it's doing what it's doing.

â?¢ And the Fed does a great deal to fill its dual mandate of keeping the economy humming and guarding against inflation. First and foremost, it sets short-term interest rates, which helps determine what businesses and consumers pay for loans, and what savers get on bank deposits and money market mutual funds. When the Fed wants to boost the economy, it reduces interest rates; when it wants to slow it down to avoid inflation, it raises rates.

â?¢ The chairman doesn't set rates, but rather steers the Fed toward a consensus. This is harder than it sounds. The other Fed governors don't have to listen to a word the Chairman says, because they are appointed by the U.S. president. The presidents of the 12 Federal Reserve banks, in turn, are chosen by those banks, and not the Fed chairman. Essentially, then, the Fed chairman is first among equals, and must spend a great deal of time guiding the Fed toward consensus.

â?¢ The chairman also guides the Fed's powerful Open Market Committee, which sets Fed policy on interest rates. While the chairman only has one vote among 12, he or she guides the discussion and sets the agenda for each meeting.

â?¢ The Fed has many administrative duties, which include overseeing the Fed's broad range of regulatory duties over the banking system. Typically, these are handled by subordinates, but it's the chairman who gets called upon when things go badly, as Ben Bernanke learned during the financial crisis. For that reason, the Fed chairman typically stays in close touch with the Treasury secretary. Bernanke and Jacob Lew, the current Treasury secretary, typically have lunch once a week.

The Fed chairman also has a big role in the Group of Seven finance ministers and central bankers of the world's largest economies. When financial crises hit other nations, it affects the U.S., too, and the Fed chairman would be expected to weigh in on those matters as well.